Question 1

Stan's Market recorded the following events involving a recent purchase of merchandise: 
Received goods for $\$ 20,000$, terms $2 / 10 , n / 30$.
Returned $\$ 400$ of the shipment for credit.
Paid $\$ 100$ freight on the shipment.
Paid the invoice within the discount period.

As a result of these events, the company's merchandise inventory

Accepted Answer

The company's merchandise inventory increased by $19,308 as a result of these events. The company received goods for $20,000, returned $400 of the shipment for credit, and paid $100 freight on the shipment. The company paid the invoice within the discount period, so the total cost of the merchandise is $19,308 ($20,000 - $400 - $100 + $208).

Question 2

Company X sells $400 of merchandise on account to Company Y with credit terms of 2/10, n/30.If Company Y remits a check taking advantage of the discount offered, what is the amount of Company Y's check?

Accepted Answer

The discount offered is 2% if paid within 10 days. So, Company Y can get a discount of 2% of $400, which is $8. Therefore, the amount to be paid by Company Y after the discount is $400 - $8 = $392.

Question 3

Touch Tronix, Inc. Sells component parts to Advanced Communications, Inc. a cell phone manufacturer. On December 10, 2011, Touch Tronix, Inc. sold €680,000 of goods to Advanced Communications, Inc. on account for $ € 880,000 $. Terms of the sale were 2/10, net 30. On December 18, 2011, Advanced Communications, Inc. paid the account in full. Advanced Communications, Inc. uses a perpetual inventory System. Which of the following is true regarding the impact on the statement of financial position for Advanced Communications, Inc. When the payment is made on December 18,2011 ?

Accepted Answer

The answer of Touch Tronix, Inc. Sells component parts to...

Question 4

Birk Company sells merchandise on account for $3,000 to Kiner Company with credit terms of 2/10, n/30.Kiner Company returns $600 of merchandise that was damaged, along with a check to settle the account within the discount period.What is the amount of the check?

Accepted Answer

The original sale was $3,000, with a $600 return, leaving $2,400. The 2% discount on $2,400 is $48, so the check amount is $2,352 ($2,400 - $48).

Question 5

Computers For You is a retailer specializing in selling computers and related equipment.Which of the following would not be reported in the merchandise inventory account reported on the statement of the financial position for Computers For You at December 31, 2011?

Accepted Answer

Shelving materials are not part of merchandise inventory; they are considered store fixtures or supplies.

Question 6

On July 9, Neal Company sells goods on credit to Al Dolan for $4,000, terms 1/10, n/60.Neal receives payment on July 18.The entry by Neal on July 18 is:

Accepted Answer

Neal Company receives payment within the discount period, so they apply the 1% discount on $4,000, which is $40. Therefore, they receive $3,960 in cash and record a $40 sales discount.

Question 7

The collection of $a ¥ 7,000$ account within the 2 percent discount period will result in a

Accepted Answer

The 2 percent discount on ¥7,000 is ¥140, so the Sales Discounts account is debited by ¥140.

Question 8

Touch Tronix, Inc. Sells component parts to Advanced Communications, Inc. a cell phone manufacturer. On December 10, 2011, Touch Tronix, Inc. sold $ € 680,000 $ of goods to Advanced Communications, Inc. on account for $ € 880,000 $. Terms of the sale were 2/10, net 30. On December 18, 2011, Advanced Communications, Inc. paid the account in full. Which of the following is true regarding the impact on the statement of financial position for Touch Tronix, Inc. When the payment is made on December 18, 2011?

Accepted Answer

The payment was made within the discount period, so Advanced Communications, Inc. paid $ € 880,000 \times 0.98 = € 862,400 $. The discount of $ € 17,600 $ (2% of € 880,000) reduces the accounts receivable, thus decreasing assets by $ € 17,600 $.

Question 9

Mather Company made a purchase of merchandise on credit from Underwood Company on August 8, for $9,000, terms 3/10, n/30.On August 17, Mather makes the appropriate payment to Underwood.The entry on August 17 for Mather Company is:

Accepted Answer

Mather Company is entitled to a 3% discount for paying within 10 days. The discount is $270 (3% of $9,000), reducing the cash payment to $8,730. The entry reduces Accounts Payable by $9,000, Merchandise Inventory by $270, and Cash by $8,730.

Question 10

Touch Tronix, Inc. Sells component parts to Advanced Communications, Inc. a cell phone manufacturer. On December 10, 2011, Touch Tronix, Inc. sold €680,000 of goods to Advanced Communications, Inc. on account for $ € 880,000 $. Terms of the sale were 2/10, net 30. Advanced Communications, Inc. paid $ € 13,000 $ in freight charges. On December 13,2011, Advanced Communications, Inc. returned $ 5 \% $ of the goods due to inferior quality. On December 18, 2011. Advanced Communications, Inc. paid the account in full. Advanced Communications, Inc. uses a perpetual inventory system. If Advanced Communications, Inc. has not yet sold any of the se goods, what is the ending balance in the inventory account after the payment is made?
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Accepted Answer

The initial purchase was €680,000. A 5% return reduces this by €34,000, leaving €646,000. The 2% discount on the remaining balance is €12,920, reducing the cost to €633,080. Adding the €13,000 freight charges results in an ending inventory balance of €646,080.

Question 11

A credit sale of 1,600 is made on April 25 , terms $ 2 / 10, n / 30 $, on which a return of 100 is granted on April 28. What amount is received as payment in full on May 4 ?

Accepted Answer

The correct answer is A.The amount received as payment in full on May 4 is £1,470. This is calculated as follows:Credit sale: £1,600Less: Return: £100Net amount: £1,500Less: Discount (2%): £30Amount received: £1,470

Question 12

Under the perpetual system, cash freight costs incurred by the buyer for the transporting of goods are recorded in

Accepted Answer

Under the perpetual inventory system, cash freight costs incurred by the buyer for transporting goods are added to the cost of the merchandise inventory.

Question 13

Touch Tronix, Inc.sells component parts to Advanced Communications, Inc.a cell phone manufacturer.During December 2011, Touch Tronix, Inc.sold €680,000 of goods to Advanced Communications, Inc.on account for €880,000.Advanced Communications, Inc.was dissatisfied with 25% of the merchandise it received due to inferior quality.On December 21, 2011, Advanced Communications, Inc.returns the goods to Touch Tronix, Inc.for credit.Which of the following is true regarding the statement of financial position for Advanced Communications, Inc.at December 31, 2011?

Accepted Answer

The answer of Touch Tronix, Inc.sells component parts to Advanced...

Question 14

Rasner Co.returned defective goods costing $5,000 to Markum Company on April 19, for credit.The goods were purchased April 10, on credit, terms 3/10, n/30.The entry by Rasner Co.on April 19, in receiving full credit is:

Accepted Answer

Rasner Co. would debit Accounts Payable and credit Merchandise Inventory for the amount of the returned goods, $5,000, as they are receiving full credit for the return.

Question 15

The collection of a $900 account after the 2 percent discount period will result in a

Accepted Answer

The customer did not take advantage of the 2% discount, therefore, the full amount of $900 will be collected. This will result in a debit to Cash for $900.

Question 16

Touch Tronix, Inc. sells component parts to Advanced Communications, Inc. a cell phone manufacturer. During December 10, 2011, Touch Tronix, Inc. sold $€ 680,000$ of goods to Advanced Communications, Inc. on account for $€ 880,000$. Advanced Communications, Inc. was dissatisfied with $25 \%$ of the merchandise it receives due to inferior quality. On December 21, 2011, Advanced Communications, Inc. returns the goods to Touch Tronix, Inc. for credit. Which of the following is true regarding the statement of financial position and the income statement for Touch Tronix, Inc. at December 31, 2011?

Accepted Answer

The answer of Touch Tronix, Inc. sells component parts to...

Question 17

The entry to record the receipt of payment within the discount period on a sale of $¥7,500$ with terms of $2 / 10 , n / 30$ will include a credit to

Accepted Answer

The entry will include a credit to Accounts Receivable for the full amount of $¥7,500$ because the customer is paying within the discount period, and the discount is recorded separately.

Question 18

The collection of a $¥ 7,000$ account after the 2 percent discount period will result in a

Accepted Answer

The answer of The collection of a $¥ 7,000$ account...

Question 19

Touch Tronix, Inc. sells component parts to Advanced Communications, Inc. a cell phone manufacturer. On December 10, 2011, Touch Tronix, Inc. sold $€ 680,000$ of goods to Advanced Communications, Inc. on account for $€ 880,000$. Terms of the sale were $2 / 10$, net 30 . On December 18,2011 , Advanced Communications, Inc. paid the account in full. Advanced Communications, Inc. uses a perpetual inventory system. Which of the following is true regarding the impact on the statement of financial position for Advanced Communications, Inc. when the payment is made on December $18,2011 ?$

Accepted Answer

The answer of Touch Tronix, Inc. sells component parts to...

Question 20

Computers For You is a retailer specializing in selling computers and related equipment.During 2011, Computers For You sells $200,000 of merchandise to Sandcastles, Inc.Computers For You incurs $24,000 of freight costs associated with these sales.Which of the following is true regarding how this $24,000 is treated on the financial statements?

Accepted Answer

The $24,000 of freight costs incurred by Computers For You is an operating expense and should be reported on the income statement as such. It should not be included in the merchandise inventory or reported by Sandcastles, Inc. as part of their financial statements.

Quiz 5: Accounting for Merchandising Operations

Company X sells $400 of merchandise on account to Company Y with credit terms of 2/10, n/30.If Company Y remits a check taking advantage of the discount offered, what is the amount of Company Y's check?

Birk Company sells merchandise on account for $3,000 to Kiner Company with credit terms of 2/10, n/30.Kiner Company returns $600 of merchandise that was damaged, along with a check to settle the account within the discount period.What is the amount of the check?

Computers For You is a retailer specializing in selling computers and related equipment.Which of the following would not be reported in the merchandise inventory account reported on the statement of the financial position for Computers For You at December 31, 2011?

On July 9, Neal Company sells goods on credit to Al Dolan for $4,000, terms 1/10, n/60.Neal receives payment on July 18.The entry by Neal on July 18 is:

The collection of $a ¥ 7,000$ account within the 2 percent discount period will result in a

Mather Company made a purchase of merchandise on credit from Underwood Company on August 8, for $9,000, terms 3/10, n/30.On August 17, Mather makes the appropriate payment to Underwood.The entry on August 17 for Mather Company is:

A credit sale of 1,600 is made on April 25 , terms $2 / 10, n / 30$ , on which a return of 100 is granted on April 28. What amount is received as payment in full on May 4 ?

Under the perpetual system, cash freight costs incurred by the buyer for the transporting of goods are recorded in

Rasner Co.returned defective goods costing $5,000 to Markum Company on April 19, for credit.The goods were purchased April 10, on credit, terms 3/10, n/30.The entry by Rasner Co.on April 19, in receiving full credit is:

The collection of a $900 account after the 2 percent discount period will result in a

The entry to record the receipt of payment within the discount period on a sale of $¥7,500$ with terms of $2 / 10 , n / 30$ will include a credit to

The collection of a $¥ 7,000$ account after the 2 percent discount period will result in a

Quiz 5: Accounting for Merchandising Operations

Company X sells $400 of merchandise on account to Company Y with credit terms of 2/10, n/30.If Company Y remits a check taking advantage of the discount offered, what is the amount of Company Y's check?

Birk Company sells merchandise on account for $3,000 to Kiner Company with credit terms of 2/10, n/30.Kiner Company returns $600 of merchandise that was damaged, along with a check to settle the account within the discount period.What is the amount of the check?

Computers For You is a retailer specializing in selling computers and related equipment.Which of the following would not be reported in the merchandise inventory account reported on the statement of the financial position for Computers For You at December 31, 2011?

On July 9, Neal Company sells goods on credit to Al Dolan for $4,000, terms 1/10, n/60.Neal receives payment on July 18.The entry by Neal on July 18 is:

The collection of a¥7,000a ¥ 7,000a¥7,000 account within the 2 percent discount period will result in a

Mather Company made a purchase of merchandise on credit from Underwood Company on August 8, for $9,000, terms 3/10, n/30.On August 17, Mather makes the appropriate payment to Underwood.The entry on August 17 for Mather Company is:

A credit sale of 1,600 is made on April 25 , terms 2/10,n/30 2 / 10, n / 30 2/10,n/30 , on which a return of 100 is granted on April 28. What amount is received as payment in full on May 4 ?

Under the perpetual system, cash freight costs incurred by the buyer for the transporting of goods are recorded in

Rasner Co.returned defective goods costing $5,000 to Markum Company on April 19, for credit.The goods were purchased April 10, on credit, terms 3/10, n/30.The entry by Rasner Co.on April 19, in receiving full credit is:

The collection of a $900 account after the 2 percent discount period will result in a

The entry to record the receipt of payment within the discount period on a sale of ¥7,500¥7,500¥7,500 with terms of 2/10,n/302 / 10 , n / 302/10,n/30 will include a credit to

The collection of a ¥7,000¥ 7,000¥7,000 account after the 2 percent discount period will result in a

The collection of $a ¥ 7,000$ account within the 2 percent discount period will result in a

A credit sale of 1,600 is made on April 25 , terms $2 / 10, n / 30$ , on which a return of 100 is granted on April 28. What amount is received as payment in full on May 4 ?

The entry to record the receipt of payment within the discount period on a sale of $¥7,500$ with terms of $2 / 10 , n / 30$ will include a credit to

The collection of a $¥ 7,000$ account after the 2 percent discount period will result in a